Bank of Korea 'Q1 Trends'
Daily Average $69.4 Billion
Up 9.6% from Previous Quarter
In the first quarter (January to March) of this year, foreign exchange trading volume reached $69.4 billion as investments in securities by Seohak Gaemi and foreigners increased. This is the largest scale since statistics compilation began in 2008.
According to the "2024 Q1 Foreign Exchange Transactions Trends of Foreign Exchange Banks" released by the Bank of Korea on the 26th, the average daily foreign exchange transactions (spot exchange and foreign exchange derivatives) of foreign exchange banks in the first quarter of this year amounted to $69.4 billion. This represents a 9.6% ($6.08 billion) increase compared to the previous quarter ($63.31 billion).
The foreign exchange transaction volume was $62.38 billion in 2022 and $65.96 billion last year. Last year’s quarterly figures were $66.83 billion in Q1, $69.37 billion in Q2, $64.32 billion in Q3, and $63.31 billion in Q4. The previous highest record was in Q2 of last year.
According to the Korea Securities Depository, the settlement amount of foreign currency securities by domestic investors increased from $91.4 billion in Q4 last year to $128.3 billion in Q1 this year. According to data from the Financial Supervisory Service, the average monthly securities trading amount by foreigners also rose from 182 trillion KRW in Q4 last year to 216 trillion KRW in Q1 this year.
By product, the average daily spot exchange transaction volume in Q1 was $26.12 billion, up 7.9% ($1.92 billion) from the previous quarter. The foreign exchange derivatives transaction volume also increased by 10.7% ($4.17 billion) to $43.28 billion compared to the previous quarter.
The increase in scale was also driven by rising demand for hedging foreign exchange risk due to the exchange rate increase. The KRW-USD exchange rate was 1,288 KRW at the end of Q4 last year but rose to 1,347 KRW at the end of Q1 this year.
An Joo-eun, head of the Capital Movement Analysis Team at the Bank of Korea’s International Department, explained, "In Q1, there is also a seasonal factor where trading volume increases after a reduction in transactions due to year-end book closing in Q4." Over the past 10 years, Q1 trading volume has increased by an average of 12% compared to Q4 of the previous year.
By bank type, domestic banks’ transaction volume was $31.06 billion, up 1.7% ($530 million) from the previous quarter. Foreign bank branches’ transaction volume increased by 17% ($5.56 billion) to $38.33 billion.
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